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The Business Case of Ellinair: How a Start-Up Airline Can Achieve Customer Engagement

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The Business Case of Ellinair: How a Start-Up Airline Can Achieve Customer Engagement The Business Case of Ellinair: How a start-up airline can achieve customer engagement Mouratidou Sofia SCHOOL OF ECONOMICS, BUSINESS ADMINISTRATION & LEGAL STUDIES A thesis submitted for the degree of Master of Science (MSc) in Management December 2018 Thessaloniki – Greece Student Name: Sofia Mouratidou SID: 1102170017 Supervisor: Dr. Lida Kyrgidou I hereby declare that the work submitted is mine and that where I have made use of another’s work, I have attributed the source(s) according to the Regulations set in the Student’s Handbook. December 2018 Thessaloniki - Greece Abstract This consulting project was written as part of the MSc in Management at the International Hellenic University for Ellinair Airlines. It examines how a startup airline like Ellinair can achieve customer engagement in such a highly competitive industry. First, the research measures the expected and perceived service quality of the company’s flights using the SERVQUAL model. Considering that the higher the quality, the higher the engagement, the results demonstrate which services of Ellinair should be improved. Additionally, the study aims at identifying the traits that define Ellinair’s brand personality and the level of self-congruity, meaning the congruity between the brand’s and the customer’s personality traits. Finally, based on the results, the study addresses to the company practical recommendations in order to boost their customers’ engagement. Keywords: Ellinair, airline industry, service quality, brand personality, customer engagement Mouratidou Sofia 30.12.2019 -i- Preface The present consulting project aims in measuring the service quality of Ellinair Airline and define its brand image in order to improve the customer engagement. The ultimate goal is to provide meaningful insights and recommendations to the company. What motivated me to choose Ellinair is my current employability at a company of Mouzenidis Group, Active MICE, and my willingness to learn more about another facet of tourism. I would like to specially thank my academic and company supervisor, Dr Lida Kyrgidou and Mrs. Georgia Panagiotou, for their valuable comments and assistance in the formulation of my research theme. Furthermore, I would like to thank Mrs. Olga Angelopoulou, Sales & Commercial Executive at Ellinair, and Mr. Romoudi Gianni, Airport Director for the aviation companies of Mouzenidis Group, for helping me getting a permission to distribute my questionnaires in the gates of “Makedonia Airport” at Thessaloniki and realize the project. -ii- Contents ABSTRACT ..................................................................................................................... I PREFACE ....................................................................................................................... ΙI CONTENTS .................................................................................................................. III 1. INTRODUCTION ...................................................................................................... 1 2. ELLINAIR OVERVIEW .............................................................................................. 3 3. LITERATURE REVIEW AND MODEL DEVELOPMENT ................................................ 5 3.1 SERVICE QUALITY .................................................................................................... 5 3.2 SELF-CONGRUENCE .................................................................................................. 8 3.2.1 BRAND PERSONALITY ............................................................................................ 8 3.2.2 SELF-CONCEPT & SELF-CONGRUITY .................................................................... 10 4. METHODOLOGY ................................................................................................... 13 5. DATA ANALYSIS AND FINDINGS ........................................................................... 15 5.1 DEMOGRAPHICS ..................................................................................................... 15 5.2 SERVQUAL MODEL.............................................................................................. 17 5.2.1 RELIABILITY TEST ............................................................................................... 17 5.2.2 GAP ANALYSIS .................................................................................................... 17 5.3 BRAND PERSONALITY ............................................................................................ 20 5.4 SELF CONGRUITY AND CUSTOMER SATISFACTION .................................................. 22 6. DISCUSSION OF FINDINGS AND RECOMMENDATIONS ........................................ 24 6.1 MOBILE APPLICATION ............................................................................................ 24 6.2 BIG DATA............................................................................................................... 25 6.3 EXPANSION OF THE FLEET ...................................................................................... 27 6.4 24/7 CUSTOMER SERVICE ....................................................................................... 28 7. LIMITATIONS AND FUTURE RESEARCH ................................................................ 29 8. CONCLUSIONS ...................................................................................................... 31 9. BIBLIOGRAPHY ..................................................................................................... 33 10. APPENDIX............................................................................................................. 36 -iii- 1. Introduction The airline industry is a major industry significantly contributing to globalization and economic growth, bringing together not only people and cultures, but also businesses. According to the Aviation Industry Leaders Report 2018 by KPMG the aviation industry has doubled in size in the past 15 years and forecasts expect this growth to continue even more aggressively. Speaking in numbers, the worldwide commercial fleet is forecast to grow from nearly 25,000 aircrafts at the beginning of 2017 to over 35,000 over the next decade. Although the majority would expect that entering the airline industry would have a great difficulty because of the high capital required, it appears that the barriers of entering the market are quite low. Indeed, operating an airline company is extremely expensive; for the initial set up of the company, the basic costs include buying aircrafts and hiring qualified, professional pilots while the ongoing operations include high fuel costs, airport fees, handling luggage and marketing expenses. However, the entry of new competitors in the airline industry is easy as far as there is easy access to cheap loans and credits. Lessors take advantage of the profitability of the airline industry and the high passenger demand by choosing to fund aircrafts. “The relatively muted impact of the recent airline bankruptcies in Europe – Alitalia, Air Berlin and Monarch – is demonstrative of the current robustness of the aviation sector.”1 The low barriers in entering the airline market, lead in the appearance of more and more airlines worldwide, mainly low cost, and consequently create an intense competition. The current trend of low-cost business models make the switching cost low for the customers who have the capability to easily move from one airline to the other hunting the best offer according to their current needs. In other words, airlines face a huge challenge in achieving customer engagement and loyalty. The fact though that well-established airlines with higher prices tend to have more loyal customers 1 The Aviation Industry Leaders Report 2018: Navigating the Cycle, kpmg.com, Retrieved from https://home.kpmg.com/ie/en/home/insights/2018/01/aviation-industry-leaders-report -1- than other start up airlines which sell in lower rates demonstrates that customers ask for more than a cheap fare to be loyal. Ellinair is not an exception as it faces the issue of engaging its individual customers and becoming a stable choice for domestic and international flights that are covered by them. The present consulting project aims in studying Ellinair Brand and making useful recommendations to increase the loyalty the customers. To reach this point, several steps are going to be followed; first, the service quality of the airline is going to be measured in terms of both in-flight and airport services. Based on the ground that the higher the quality, the higher the engagement, proposals are going to be presented for the improvement of the low rated services. Furthermore, the research focuses on formulating the Brand Personality of Ellinair, which will assist in defining the ideal target group and addressing marketing campaigns to the most appropriate niche markets. Before analyzing the above, a presentation of Ellinair airline and its short-term goals is a prerequisite in order to better exploit the research results. -2- 2. Ellinair Overview Ellinair Company operates since 2013 in the highly competitive airline industry and can be considered as a start-up airline company in the Greek market. It is a subsidiary of Mouzenidis Group which started operating with the aim to cover the demand of Mouzenidis Travel for airline seats. The scheduled flights were added only in 2015 and today the company operates from 5 bases to 42 destinations. Ellinair’s fleet counts 10 aircrafts of which the 6 operate
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